On Wednesday 2nd June, the House Judiciary Committee launched a probe into Spotify’s Discovery Mode program. The committee sent a letter to Daniel Ek, founder and CEO of Spotify, requesting more information to be provided on the feature.
The letter detailed concerns about how the program would encourage “race to the bottom,” forcing artists and labels to accept lower royalties. The letter then went on to say:
“At a time when the global pandemic has devastated incomes for musicians and other performers, without a clear path back to pre-pandemic levels, any plan that could ultimately lead to further cut pay for working artists and ultimately potentially less consumer choice raises significant policy issues.”
The Discovery mode was launched in November 2020 as a pilot program limited to Spotify’s Radio and Autoplay features. It prioritises songs chosen by artists and labels who accept lower royalty rates in exchange for greater exposure. Spotify claims the feature is designed to help artists “connect with new listeners”.
The Union of Musicians welcomed the news of the House Judiciary Committee’s investigation, they said:
“UMAW urges Spotify to comply with the oversight letter and explain its unfair payment practices. The group also continues to call on the company to end their payola practices, pay artists at least 1 cent per stream, increase the transparency of the company’s business practices, abandon surveillance technology such as the speech recognition patent, and halt lawsuits against artists.”
The Union of Musicians already launched the Justice At Spotify campaign earlier this year in March, organising coordinated worldwide protests.
Furthermore, the House Judiciary Committee went on to detail how Spotify’s actions indicate a desire to continue encouraging a race to the bottom and said:
“This is particularly true under Spotify’s current model, where artists’ returns are already low, with Spotify reporting to pay artists less than a cent per song streamed (estimated in the $.003 to $.005 range) and Spotify has challenged an administrative ruling setting a higher royalty rate for songwriters.”
It will be interesting to see how this one plays out and what response Spotify gives. Will their information provide reassurance or just cast more doubt around the ongoing debate surrounding streaming royalty rates?